Fewer US companies are buying back their shares, despite looser regulatory restrictions, as they seek to conserve cash. Regulators have sought to encourage companies to buy shares in the open market by easing restrictions on corporate buy-backs as part of emergency measures introduced last month. The measure, due to expire on Friday, allows companies to repurchase up to 100% of their shares’ average daily trading volume – compared with no more than 25% previously. They can also conduct buy-backs throughout the trading day, whereas before they would have risked litigation if they bought at the start of a day’s trading or in the last half hour.  But few companies appear to have taken advantage of the looser restrictions while bellwethers from Alcoa to General Electric have even told investors in recent weeks that they plan to suspend buy-back programmes. The trend contrasts with the past when corporate buy-backs have helped to bolster faltering stock markets. For instance, buy-backs helped the US stock market recover from its late-2002 slide, when outflows from equity mutual funds surged.

This entry was posted by Gwen Robinson on Wednesday, October 15th, 2008 at 5:28 and is filed under Capital markets. Tagged with seek to conserve cash. Edit this entry.